In Blue Area or on the Constitution Avenue, every day new Land Cruiser Prados or other expensive vehicles, with green number plates and the words Senator or MNA inscribed on them, pass by ordinary folks, who complain that they rarely see a legislature in a small car. Pakistan’s economy sustains 3-4 percent loss of GDP per annum in the wake of crippling electricity shortages and subsidy that cause 10 percent unemployment, revealed Pakistan’s energy experts during Pak-US Strategic Dialogue, held recently in Islamabad.
According to SBP’s former Governor Dr. Muhammad Yaqub, the rate of inflation is much higher than what the official statistics show. The budgetary situation is much worse than what the budget documents reveal or the Ministry of Finance projects. Budget subsidies are substantial and are going to the wrong people. Several public enterprises are bankrupt. The balance sheets of banks are loaded with lending to the government and its bankrupt enterprises on the invalid assumption that sovereign debt cannot be in danger of default....The underground economy is expanding relative to the recorded economy. The medium term balance of payment situation is much more precarious than what the foreign exchange reserve position reflects....Two major threatening economic storms are brewing: On the domestic front, the country is headed towards runaway inflation.
On the external front, debt default is a real possibility. The flood ravages in mid-2010 and again in August and September this year have added further to the economic woes of the country, interrupted its economic recovery, added to inflationary pressures and partly reversed its gains in poverty reduction. Flood-related reconstruction activities will span several years, and therefore impose durable pressure on the already small fiscal space. The Prime Minister has appealed to the citizens and the world community to help the flood victims. How can you expect others to donate generously when they see such abhorrent display of extravagance by our legislators and State minions?
According to a famous saying, leaders lead from the front and set an example for others to follow. Isn’t it a shame to see the example being set by our leaders? If the federal secretaries, including British citizens, and senior officers of the armed forces, say major generals (including Ayub Khan), have been pedaling to their offices till 1958, what achievements have their successors made that the government allowed them free use of one limousine for self and families to all officers in BS-20 and above? Perhaps, prompted by a desire to perpetuate their rule, crafty rulers and despots have been doling out liberal perks and privileges to the bureaucracy to muster their support.
While public transport is in a shambles, officers and their families roam around in luxury cars! Furthermore, till Yahya Khan’s rule, there was no concept of free kitchen for the top hierarchy and their guests. In his autobiography, Gohar Ayub writes that whenever he visited his father FM Ayub Khan, the President House staff invariably presented to them a bill for refreshments, if any were served.
Meanwhile, as the fiscal and trade deficits increased sharply, the World Bank, in its August 2011 newsletter, notes that Pakistan’s economic growth slowed down from about 7 percent in 2006-07 to only 1.2 percent in 2008-09; inflation soared to over 20 percent; and the favourable debt dynamics stalled. It adds: “A government facing challenges on various fronts has found it difficult to sustain bold action required to stabilize the economy. Revenue efforts fell well short of the desired levels and hemorrhaging of the budget continued due to government’s inability to reduce untargeted subsidies. Monetary modes of financing the high fiscal deficits thwarted all attempts to tame inflation.”
Inflation is the cruelest form of taxation hitting the poorest segments of society the hardest and creating social and political unrest. It hurts growth, adds to poverty and economic crimes and generates a dual society that can ultimately promote a class war and social and political disorder. The World Bank has highlighted a number of critical challenges that Pakistan needs to address to accelerate its growth. These are weak revenue mobilization, poor composition and efficiency of public expenditure, inadequate and unreliable infrastructure, low level of human development, conflict and insecurity, imminent demographic bulge, which would require jobs for a young, growing and increasingly urbanized population; poor and deteriorating level of governance in a context of accelerated decentralization to provincial government.
The bulging debt trap calls for observing austerity and curtailing non-development expenditure. Furthermore, all stakeholders need to sit together to devise a strategy and a perspective plan to bail out Pakistan from the precarious situation. The plan, if adopted as an Act of Parliament, would become binding for all governments. With change in government, the new rulers would find it difficult to change or alter it as per their whims.